Business news from Ukraine

UKRAINE HOPES TO PROVE U.S. IT EFFECTIVELY PROTECTS INTELLECTUAL PROPERTY RIGHTS

KYIV. March 1 (Interfax-Ukraine) – Ukraine hopes it will be able to prove at open hearings at the Office of the United States Trade Representative (USTR) that it effectively protects intellectual property rights (IPR), despite recommendations by business representatives that Ukraine should be again designated as a Priority Foreign Country, which is the worst classification given to “foreign countries that deny “adequate and effective” protection of intellectual property rights.

The hearings will begin on March 1, the Ukrainian Economic Development and Trade Ministry said.

A Ukrainian delegation at the hearings will be represented by Deputy Economic Development and Trade Minister and Ukrainian trade envoy Nataliya Mykolska and Director of the ministry’s department for the development of innovation and intellectual property Olena Mynych.

“It is important to Ukraine, as the situation in IPR protection has a direct influence on any decision as for an access to our state to the U.S. market, including as part of the U.S. Generalized System of Preferences [provides duty-free treatment to goods of designated beneficiary countries and territories],” Mykolska said.

The Ukrainian delegates will inform the U.S. side about Ukraine’s progress in protecting of intellectual property rights in such directions as the fight against piracy in copyright and related rights; legalization of software at government agencies; the elimination of problems in collective management of property rights; strengthening of IPR protection; reform of state agencies that manage intellectual property.

According to Mykolska, Ukraine’s status in the Special 301 Report in 2015 was improved, which was a certain gesture of confidence in Ukraine, so the country will continue to take measures to be completely excluded from the list of the countries that deny effective protection of intellectual property rights.

As was reported. Ukraine is on the Priority Watch List in 2015. Ukraine was designated a Priority Foreign Country (PFC) in the 2013 Special 301 Report.

As described in that report, the three grounds for Ukraine’s PFC designation were: (1) the unfair, nontransparent administration of the system for collecting societies, which are responsible for collecting and distributing royalties to U.S. and other rights holders; (2) widespread (and admitted) use of illegal software by the Ukrainian government agencies; and (3) failure to implement an effective means to combat the widespread online infringement of copyright and related rights in Ukraine, including the lack of transparent and predictable provisions on intermediary liability and liability for third parties that facilitate piracy, limitations on such liability for Internet Service Providers and enforcement of takedown notices for infringing online content. Following Ukraine’s designation and pursuant to statute, the Office of the U.S. Trade Representative conducted an investigation under Section 301 of Ukraine’s IPR acts, policies, and practices, which concluded in March 2014. The U.S. Trade Representative determined that while IPR problems persisted, no adverse actions would be taken against Ukraine because of the political situation in Ukraine at that time.

UKRAINE RECEIVES PERMITS TO SUPPLY POULTRY, BEEF, LAMB TO UAE, TALKS ON SUPPLIES OF DAIRY PRODUCTS, EGGS, FISH UNDERWAY

KYIV. March 1 (Interfax-Ukraine) – The United Arab Emirates (UAE) has permitted supply of Ukrainian lamb meat, poultry and beef, and the veterinary services of the two countries are being agreed the draft veterinary certificates for exports of milk and dairy products, fish and fish products.

According to a posting on the website of the State Veterinary and Biosecurity Service of Ukraine, on February 25, 2016 deputy head of the State Veterinary and Biosecurity Service of Ukraine Oleksandr Verzhykhovsky met a delegate from the World Organisation for Animal Health (OIE) from the UAE Abdel Rahim Al-Hamdi held at the UAE Ministry of Environment and Water.

Al-Hamdi said at the meeting that a ban on exports of beef from Ukraine has been lifted and the access of Ukrainian companies that have the right to export poultry to the EU to the UAE market has been approved.

The sides signed veterinary certificates for exports of beef and lamb meat from Ukraine to the UAE, which is confirmation of Ukraine’s right to supply these products to the UAE market.

The parties agreed to quickly draw up the veterinary certificate for exports of honey from Ukraine and health certificates for exports of confectionary, canned fruit and vegetables and other food.

The Ukrainian veterinary service reported that the interested companies are to apply to the UAE Ministry of Environment and Water to receive the right to export poultry, beef and lamb meat. After the inspection the companies will be included in the list of companies that can exports these products to the UAE.

INFLATION IN UKRAINE, 2015

Source: State Statistics Services

Source: State Statistics Services

KERNEL SEES 2.7 TIMES RISE IN NET PROFIT IN Q2 FY2016

KYIV. Feb 26 (Interfax-Ukraine) – Kernel, one of the largest Ukrainian agrarian groups, saw a rise of 2.7 times in net profit in Q2 of FY2016 started in July 2015, to $117.75 million, the company said in a report on Friday.

The company said that its revenue over the period fell by 5%, to $620.97 million, gross profit dropped by 3.2%, to $166.3 million and operating profit rose by 5%, to $129.9 million, reflecting year-over-year lower grain prices and mixed dynamics in sales volumes across segments

Kernel’s earnings before interest, tax, depreciation and amortization (EBITDA) reached $145.1 million, which is 2% up year-over-year.

Revenue from sunflower oil sold in bulk rose by 11%, to $316 million, from bottled sunflower oil fell by 12%, to $34 million, grain – by 17%, to $258.5 million, it grew by 12% from export terminal services, to $12.4 million and fell by 9% from silo services, to $22.7 million.

Net debt decreased to $465.8 million as of December 31 2015 versus $735.2 million as of December 31, 2014, as the company utilized its strong operating cash flow to improve its balance sheet.

In H1 FY2016 Kernel saw a rise of 2.1 times in net profit, to $141.8 million, revenue fell by 19%, to $998.69 million, gross profit – by 15%, to $239.79 million and operating profit – by 8%, to $169.454 million.

EBITDA in H1 FY2016 totaled $200.2 million, which is 10% down year-over-year.

Kernel is a vertically integrated company which has been operating in the Ukrainian agribusiness sector since 1994. The group produces sugar and sunflower oil, distributes bottled oil under the brand names Schedry Dar, Stozhar and Chumak Zolota, exports oil and grain, and provides elevator storage services for grain and oilseeds.

FARMAK ALMOST DOUBLES NET PROFIT IN 2015

KYIV. Feb 29 (Interfax-Ukraine) – Public joint-stock company Farmak (Kyiv), a pharmaceutical manufacturer, saw a 96.9% rise in net profit in 2015, reaching UAH 407.279 million.

The company has reported in the information disclosure system of the National Commission for Securities and the Stock Market of Ukraine, the company’s results will be discussed at a general meeting of its shareholders scheduled for March 31, 2016.

As was reported, in 2014, Farmak boosted sales by 26.1% from 2013, to UAH 2.5 billion, its net profit shrank by 29.7%, to UAH 206.854 million. In the first half of 2015, its net profit amounted to UAH 168.596 million.

Farmak produces up to 200 different medicines.

By 2020, the company plans to boost sales to $1 billion and reduce the share of its sales in Ukraine from 80% to 60% of total sales. The company plans to ensure 10% of its sales on well regulated markets of Eastern Europe and the CIS each.

In 2014, Farmak launched 19 new medicines on the basis of nine new generic names.

According to Proxima Research, Farmak’s share of the Ukrainian pharmaceutical market is 5.6%.

Filia Zhebrivska is Farmak’s ultimate beneficiary.

EEC’S DECISION TO IMPOSE ANTI-DUMPING MEASURES ON SEAMLESS, STAINLESS STEEL PIPES FROM UKRAINE TAKES EFFECT

KYIV. Feb 29 (Interfax-Ukraine) – The decision of the Eurasian Economic Commission, the regulating body of the Eurasian Economic Union (EEU), to impose the anti-dumping duty for five years on Ukrainian seamless, stainless steel pipe up to 426 mm in diameter equal to 18.96% of the customs value took effect on February 26, 2016.

The duty on pipe from Centravis Production Ukraine and Interpipe Niko Tube LLC is 4.32% of the customs value.

The decision took effect in 30 calendar days from the moment of its official publication. The duties are in effect until February 26, 2021.

Interpipe told Interfax-Ukraine that Interpipe Niko Tube LLC does not produce stainless steel pipes.

“We could roll the pipes under an order of another company that included our data into the documents,” Interpipe said.

As reported, imports of stainless steel pipe to the EEU nations fell 28.7% in 2011-2014, imports of pipe from Ukraine rose 15.9% in that period. The share of Ukrainian pipe in total imported pipe rose to 54% in 2014 from 33.2% in 2011.

Meanwhile, prices for Ukrainian pipe declined 9.1% in 2011-2014, while prices from suppliers in other countries rose 20.5%. Price offers from Ukrainian manufacturers of seamless, stainless steel pipe declined as much as 29.33% at purchase tenders held by EEU states. The markdowns amounted to about 13% in 2015.

Based on the results of the investigation, the anti-dumping duty was set at 18.96%.

As a result of the pressure from Ukrainian producers in 2011-2014, the weighted-average price of the pipe products at manufacturers in EEU countries declined 2.5%, although weighted-average costs increased 5.7%. That reduced sales margins to an extremely low level: 80% below the 2011 level and 85% below the 2013 level. Earnings for producers of seamless, stainless steel pipe in the EEU countries plunged 73.9% in 2011-2014.

The Eurasian Economic Commission began the anti-dumping investigation into imports from Ukrainian pipe manufacturers in February 2015.

The investigation was launched based on statements submitted by OJSC Volzhsky Pipe Plant, TMK-INOX LLC, Pervouralsky Novotrubny Zavod and Chelyabinsk Tube Rolling Plant (ChelPipe).